Indivisibility Or Discontinuity

Indivisibility Or Discontinuity

Indivisibility, or discontinuity, the technical or physical characteristics of a factor of production or commodity which prevent its being used except in minimum quantities. Most machinery and capital equipment must be used in 'lumps' of minimum size. A workman is also an 'indivisible' unit in this respect; the hands used for an assembly line cannot be separated from the legs that could be simultaneously used for messenger work.

In many eases these exigencies of construction that compel a factor to be used as a single unit can be overcome in a single firm, by altering the terms on which the use of factors can be hired: machinery may be rented or hired for limited periods; specialized skills may be bought from agencies as and when required. Even here there are indivisibilities (there are minimum charges for secretaries, cleaners, economic consultants). Moreover this kind of refinement is not cost-less; there are therefore economic advantages to a firm in increasing its scale of operations to the point at which it can make continuous use of indivisible factors. For example, at some scales of production it may pay a company to have a market research department or a staff training school. 'Where the size of the indivisible unit is large (in relation to annual output) plants or firms will tend to be large: technical indivisibilities tend to determine the size of plant; others, such as financial, the size of firms.

The economic importance of indivisibilities will vary from industry to industry: in oil refining, for example, they tend to dictate plants and firms of large individual size; in farming and high risk industries such as the fashion trades they are less important and are replaced by other influences. In all cases, however, indivisible factors are fundamental in determining how marginal cost of production changes with output from a given plant.



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